REPORT 


of 

Illinois  Farm  Commission 

to 

The  Governor 


DECEMBER  15,  1920 


[Printed  by  authority  of  the  State  of  Illinois.] 


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a 


REPORT 

of 

Illinois  Farm  Commission 

to 

The  Governor 


Members  of  the  commission: 

Charles  Adkins,  Springfield,  Chairman , 
C.  V.  Gregory,  Chicago, 

Henry  L.  Wood,  Sheffield, 

Howard  Leonard,  Eureka. 

J.  E.  Harris,  Bushnell. 


[Printed  by  authority  of  the  State  of  Illinois.] 


Schnepp  &  Barnes,  Printers 
Springfield,  III. 

1920. 

44128—3,000 


To  His  Excellency,  Frank  O.  Lowden, 

Governor  of  Illinois. 

Sir: 

The  commission  provided  for  by  “An  Act  to  Create  the  Illinois 
Farm  Commission,  to  Define  its  Powers  and  Duties  and  to  make  an 
Appropriation  Therefor” ,  to  investigate  conditions  in  Illinois  regard¬ 
ing  the  operation  and  leasing  of  Illinois  farm  lands,  the  growth  of 
farm  tenancy  in  this  State,  the  maintenance  of  the  fertility  of  the 
land,  and  such  other  questions  as  may  bear  upon  the  problem  of  crop 
production  and  profitable  agriculture,  beg  leave  to  submit  to  Your 
Excellency  the  following  report,  as  required  by  law. 

Tenant  farming  is  more  prevalent  in  the  central  and  northern 
parts  of  the  State  than  elsewhere  in  Illinois.  The  richer  and  more 
productive  the  soil,  the  higher  the  percentage  of  farms  operated  by 
tenants.  Statistics  of  1910  show  as  high  as  66  per  cent  of  the  farms 
in  the  northern  and  central  sections  operated  by  tenants  as  com¬ 
pared  with  only  about  30  per  cent  in  southern  Illinois. 

Public  hearings  were  advertised  and  held  by  the  commission  at 
the  following  cities :  Champaign,  Danville,  Watseka,  El  Paso,  Gales¬ 
burg,  Princeton  and  Woodstock.  Few  tenants  living  under  unfavor¬ 
able  conditions  appeared  at  these  hearings.  They  would  naturally 
refrain  from  coming  before  the  commission  and  telling  of  the  bad 
conditions  under  which  they  were  living,  as  in  many  cases  such  action 
on  their  part  would  terminate  their  leases,  yet  there  was  a  fairly 
representative  attendance  of  landlords  and  tenants  of  the  better  class 
at  each  meeting.  They  gave  an  apparently  fair  report  of  the  con¬ 
ditions  under  which  the  land  is  farmed  by  both  land  owners  and 
tenants  in  each  locality. 

MEETING  AT  CHAMPAIGN. 

On  February  23,  1920,  a  meeting  was  held  at  Champaign,  at¬ 
tended  by  forty  farmers.  Most  of  the  tenants  who  were  heard 
had  one-year  leases,  and  the  majority  of  them  seemed  to  see  no  special 
advantage  in  long-term  leases.  This  sentiment  prevailed  at  other 
places.  Most  of  the  landlords  and  tenants  took  the  ground,  that  where 
both  parties  were  satisfied,  a  long  term  by  the  tenant  naturally  fol¬ 
lowed.  On  the  other  hand,  if  either  party  to  a  long-term  lease 
became  dissatisfied,  it  made  a  very  unpleasant  working  condition  be¬ 
tween  the  two,  which  could  not  be  terminated  until  the  expiration  of 
the  lease. 

Another  idea  brought  out  at  all  the  hearings  was  that  it  was  not 
safe  for  a  tenant  farmer  with  a  limited  amount  of  money  to  buy  land 
at  the  present  high  prices.  There  were  exceptions,  some  taking  the 
position  that  a  tenant  stood  as  good  a  chance  of  becoming  a  land 


f  44257 


4 


owner  at  present  high  prices  of  farm  products  (which  was  in  Febru¬ 
ary,  1920)  as  he  did  when  land  and  products  were  cheaper. 

At  Champaign,  Watseka,  Danville  and  El  Paso,  grain  farming 
predominates.  A  start  had  been  made  in  the  use  of  clover,  lime¬ 
stone  and  phosphate.  The  landlord  generally  furnishes  one-half  the 
clover  seed,  all  the  limestone  and  phosphate,  and  the  tenant  hauls 
them  to  the  farm  and  puts  them  on.  This  is  being  done,  however, 
only  to  a  limited  extent  on  rented  farms.  In  these  localities  land 
is  generally  leased  for  one-half  of  all  grain  delivered  at  market  and 
from  $6.00  to  $10.00  per  acre  for  pasture.  Some  owners  charged 
the  tenant  the  above  rent  and  a  bonus  of  from  $1.00  to  $2.00  per 
acre,  and  occasionally  as  high  as  $10.00  per  acre,  and  some  rented 
their  land  for  two-fifths  of  the  grain,  but  these  terms  were  excep¬ 
tions.  Only  a  few  rent  on  a  cash  basis.  Generally  speaking,  very 
little  is  being  done  to  maintain  the  soil,  and  in  most  cases  the  land 
is  growing  poorer,  while  tenancy  is  on  the  increase.  According  to 
the  1920  census,  about  59  per  cent  of  the  farms  in  this  section  are 
operated  by  tenants,  an  increase  of  about  5  per  cent  in  ten  years. 
Land  is  selling  at  from  $300.00  to  $500.00  per  acre. 

Many  of  these  farms  are  owned  by  absentee  landlords  who  gen¬ 
erally  take  little  interest  in  maintaining  their  farms  and  in  the  com¬ 
munity  life.  Where  there  is  a  large  percentage  of  tenancy,  it  was 
learned,  the  land  is  not  quite  so  productive,  improvements  are  not 
so  good,  and  there  is  less  community  spirit  than  is  found  where  opera¬ 
tion  of  farms  by  the  owners  is  the  rule. 

MEETING  AT  GALESBURG. 

On  February  26  a  meeting  was  held  at  Galesburg.  Here  we 
found  a  different  system  of  farming.  Most  of  the  live  stock  in  this 
State  is  fed  between  the  Illinois  and  Mississippi  rivers.  A  different 
system  of  leasing  is  followed,  due  to  live  stock  farming.  Here  the 
landlord  furnishes  the  land,  one-half  the  live  stock  and  one-half  the 
seed,  while  the  tenant  furnishes  work  stock,  labor,  machinery,  and 
one-half  of  live  stock.  Farm  crops  are  fed  to  live  stock  and  every¬ 
thing  sold  off  of  the  farm  is  divided  equally.  The  landlord  main¬ 
tains  buildings  and  fences. 

In  this  locality  tenants  have  better  farm  improvements.  One- 
year  leases  prevail,  yet  the  tenants  stay  longer  on  the  same  farms 
than  where  grain  farming  is  followed.  Land  is  maintained  better 
and  is  more  productive  because  of  the  live  stock  farming.  There 
are  better  churches,  better  schools,  better  community  life,  better 
satisfied  tenants,  and  fewer  absentee  landlords.  Most  of  those  who  ex¬ 
pressed  an  opinion  thought  a  man  with  $10,000  and  his  equipment  to 
run  a  quarter  section  of  land  would  have  a  hard  time  paying  for  a 
160  acre  farm  at  present  prices.  A  few  were  of  the  opinion  that  he 
could  do  it  as  easily  as  twenty  years  ago,  if  the  prices  for  farm 
products  were  maintained.  Corn  then  was  about  $1.80  per  bushel 
on  the  farm;  it  was  about  50  cents  per  bushel  on  November  26,  1920. 


At  Princeton  and  elsewhere  in  that  locality  more  live  stock  is 
raised  than  at  Champaign,  Watseka  and  El  Paso,  but  less  than  at 
Galesburg.  More  land  is  rented  for  cash. 

MEETING  AT  WOODSTOCK. 

On  February  28,  1920,  the  commission  met  at  Woodstock.  In 
this  vicinity  45.9  per  cent  of  the  land  is  farmed  by  tenants.  This  is 
an  increase  of  3.6  per  cent  in  ten  years.  Land  is  selling  at  from 
$160.00  to  $300.00  per  acre;  dairy  farming  is  followed  for  the  most 
part.  Not  much  phosphate  is  used.  Land  is  rented  on  the  partner¬ 
ship  or  cash  rent  basis.  Cash  rent  is  from  $8.00  to  $12.00  per  acre. 
There  is  not  much  absentee  landlordism.  About  50  per  cent  of  the 
farms  are  operated  by  the  owners’  sons.  These  young  men  said  that 
if  their  fathers  did  not  own  the  land  they  would  go  to  the  city, 
because  they  thought  the  opportunity  to  succeed  there  would  be  better 
than  to  start  in  as  farm  hands  or  tenant  farmers  in  the  hope  of 
acquiring  farms.  Most  of  the  land  here  was  bought  and  sold  by 
speculators.  Some  of  the  tenants  declared  that  improvements,  phos¬ 
phate,  etc.,  applied  by  the  tenant,  should  be  paid  for  by  landlord  if  the 
tenant  leaves  the  farm  before  reaping  the  benefit. 

RECOMMENDATIONS. 

It  would  seem  from  the  above  investigation  made  by  your  com¬ 
mission,  that  if  we  hope  to  maintain  the  fertility  of  our  soil  and  our 
community  life  in  the  rural  districs,  to  make  farm  life  attractive 
enough  to  keep  our  best  young  people  on  the  farms,  to  feed  the  pres¬ 
ent  generation,  and  leave  our  soil  so  that  it  will  feed  future  gnera- 
tions,  it  is  necessary : 

First,  to  discourage  speculation  in  land,  whereby  land  values  are 
made  higher  than  the  producing  power  will  justify.  To  accomplish 
this  we  would  recommend  a  transfer  tax  of  one  per  cent  of  selling 
price  on  all  transfers  made  in  less  than  one  year  after  ownership  is 
acquired,  safeguarded  with  such  provisions  as  will  protect  transfers 
other  than  speculative. 

Second,  with  the  large  percentage  of  tenancy  in  this  State,  the 
tenant  necessarily  is  an  important  factor  in  maintaining  the  soil,  and 
lie  should  be  encouraged  and  protected  in  his  efforts  to  do  so.  There¬ 
fore,  your  commission  would  recommend  a  “tenant’s  rights”  law,, 
properly  safeguarding  both  the  rights  of  the  landlord  and  tenant,  to 
encourage  the  tenant  to  build  up  the  soil  and  the  farm  generally.  This 
law  should  provide  for  reimbursement  of  the  tenant,  on  the  termina¬ 
tion  of  his  lease,  for  the  improvements  he  puts  on  the  land  with  the 
consent  of  the  landlord.  It  should  also  protect  the  landlord  against 
the  unnecessary  destruction  of  his  property  by  a  careless  tenant.  This 
would  encourage  both  good  landlords  and  good  tenants. 

Third,  we  recommend  the  Federal  Farm  Loan  Bank  as  a  sane  .* 
plan  to  furnish  long  term  credit  on  farm  lands,  and  urge  the  enact¬ 
ment  of  necessary  legislation  to  protect  and  promote  second  mortgage 
loans  on  farm  lands. 


6 


Fourth,  we  recommend  that  an  appropriation  of  $25,000  be  made 
to  the  Farm  Management  Department  of  the  University  of  Illinois, 
for  the  purpose  of  making  a  farm  tenancy  survey. 

Charles  Adkins, 

C.  V.  Gregory, 

Henry  L.  Wood, 

Howard  Leonard, 

J.  E.  Harris. 

Illinois  Farm  Commission. 

Springfield,  Illinois,  December  15,  1920. 


* 


MEETING  OF  ILLINOIS  FARM  COMMISSION. 

Held  October  26,  1920. 

Present — Charles  Adkins,  Chairman;  C.  V.  Gregory  and  How¬ 
ard  Leanard.  members  of  Commission;  H.  H.  Parke,  Assistant  Di¬ 
rector  of  Agriculture ;  B.  H.  Hibbard,  Professor  of  Agricultural 
Economics,  University  of  Wisconsin,  College  of  Agriculture,  Madison, 
Wis. ;  H.  W.  Danforth,  President  Federal  Land  Bank,  St.  Louis,  Mo. 
and  O.  G.  Lloyd,  Head  of  Dept,  of  Farm  Management,  Agricultural 
Experiment  Station,  Purdue  University',  LaFayette,  Ind. 

Remarks  by  Mr.  Hibbard  and  answers  to  questions  made  by  him : 

The  subject  of  tenancy  is  one  I  have  been  studying  for  a  long* 
time.  It  is  but  a  few  years  since  real  information  on  this  question 
became  available.  The  first  Federal  Census  to  include  a  report  on 
tenancy  was  that  of  1880.  For  years  previous  to  that  time  we  have 
only  scattered  information. 

Tenancy  is  clearly  one  of  the  vital  problems  of  the  country. 
The  prosperity  of  agriculture  depends  primarily  upon  the  soil.  It 
is  very  generally  believed  that  no  high  grade  agriculture  can  be  de¬ 
veloped  on  the  basis  of  tenant  occupancy.  While  this  may  not  be 
wholly  the  case,  it  is  beyond  question  that  ownership  of  the  farms 
on  the  part  of  the  occupants,  contributes  not  only  to  the  general 
prosperity  of  the  community  but  also  to  many  other  community  charac¬ 
teristics  which  are  just  as  important  as  financial  prosperity.  It  is 
true  that  good  results  have  been  obtained  in  some  places,  notably  Eng¬ 
land.  and  without  occupying  ownership.  Nevertheless  the  case  of 
England  is  an  exception  and  moreover  it  has  become  increasingly 
probable  during  the  past  few  years  that  even  the  English  tenant  system 
is  on  a  shaky  foundation. 

In  an  attempt  to  explain  tenancy  it  is  necessary  to  note  the 
price  of  land,  the  character  of  the  agriculture  and  likewise  the  charac¬ 
ter  of  the  people.  As  to  the  first  point,  it  is  beyond  all  doubt  that 
tenancy  follows  high  priced  land  very  closely.  From  one  end  of  the 
country  to  the  other  tenancy  is  most  prevalent  where  land  prices 
are  highest,  with,  it  is  true,  a  few  exceptions.  The  most  pronounced 
correlation  between  high  price  of  land  and  percentage  of  tenancy  is 
to  be  found  through  the  heart  of  the  corn  belt.  It  can  be  illustrated 
just  as  well,  however,  in  the  case  of  a  single  state,  as  Illinois.  In 
the  central  and  east-central  parts  of  the  State  the  price  of  land  is  the 
highest  to  be  found  over  any  similar  area  in  the  entire  country. 
Within  the  counties  of  this  area,  the  percentage  of  tenancy  averaged 
over  50  per  cent  ten  years  ago.  It  seems  to  have  gone  still  higher 
during  the  intervening  years.  In  contrast  with  this  the  southern  part 
of  Illinois,  not  so  favorably  situated  for  producing  corn  or  other 


8 


grain  crops  on  a  big  scale,  shows  land  values  very  much  lower.  Cor¬ 
respondingly  the  percentage  of  tenancy  is  hardly  more  than  half  as 
high  as  in  the  central  part  of  the  State.  The  price  of  land  is  lower 
per  acre  in  southern  Illinois  and  the  farms  are,  at  the  same  time, 
smaller  in  size,  thus  giving  a  distinctly  lower  figure  as  the  total  value. 
That  tenancy  is  much  lower  in  southern  Illinois  is  apparently  due  to 
the  type  of  agriculture  carried  on  in  these  two  sections  respectively. 
In  the  central  part  of  the  State  conditions  are  exceedingly  favorable 
for  the  production  of  great  fields  of  corn,  handled  for  the  most  part 
by  machinery.  This  appeals  to  the  tenant  who  is  always  anxious 
to  make  a  complete  turnover  within  a  given  year.  In  the  southern 
part  of  the  State  values  are  not  so  high ;  it  is  not  so  easy  to  pro¬ 
duce  one  big  crop  and  be  ready  to  move  on.  The  crops  which  are 
produced  are  of  a  more  miscellaneous  character. 

Thus,  for  two  reasons,  tenancy  is  more  prevalent  on  the  better 
land:  First,  the  tenant  approves  it  since  he  has  much  greater  hope  of 
a  favorable  outcome  during  a  given  season.  Second,  the  same  man 
who  might  possibly  farm  as  a  tenant  is  much  more  likely  to  buy 
for  himself  where  land  is  cheap  and  farms  are  small,  than  where  they 
are  large  and  dear. 

The  relation  between  tenancy  and  type  of  agriculture  is  well  il¬ 
lustrated  in  connection  with  very  many  different  crops.  If,  for  ex¬ 
ample,  we  should  pick  out  one  hundred  truck  farms  in  the  State  of 
New  Jersey,  and  find  that  on  fifty  of  them  potatoes  are  the  predomi¬ 
nating  product  and  on  the  other  fifty  strawberries  are  in  the  lead,  we 
would  know,  without  looking  at  the  figures,  that  the  potato  growers 
were  in  a  large  proportion  tenants,  and  the  strawberry  growers,  in 
nearly  all  cases,  owners.  The  explanation  in  this  case  is  obvious.  The 
strawberries  require  attention  over  a  period  of  years.  The  tenant, 
who  has  the  prospect  of  moving  at  almost  any  time,  is  not  disposed 
to  put  his  efforts  into  such  a  project.  On  the  other  hand,  he  can 
grow  a  crop  of  potatoes,  harvest  and  sell  them,  before  the  expira¬ 
tion  of  even  the  one  year  lease. 

Coming  back  to  Illinois,  we  might  view  the  case  from  the  same 
standpoint  by  choosing  first  a  large  group  of  farms  on  which  corn 
and  wheat  are  the  leading  crops ;  another  group  in  which  dairying, 
fruit,  and  many  miscellaneous  crops  make  up  the  products.  It  will 
be  absolutely  certain  that  tenancy  will  be  very  prevalent  on  the  grain 
farms  and  by  no  means  as  prevalent  on  the  farms  of  mixed  type. 
An  excellent  example  of  the  failure  of  tenancy  to  follow  high  prices 
are  facts  with  respect  to  the  citrus  fruits  of  California,  where  from  96 
to  98  per  cent  of  all  oranges  and  lemons  are  grown  on  owned  farms. 
Conversely,  a  very  high  proportion  of  the  wheat  of  the  Falouse 
country  is  grown  on  rented  land. 

One  of  the  main  characteristics  of  tenancy  at  the  present  time 
is  the  short  lease.  Noting  the  results  of  short  tenure,  many  of  our 
friends  have  arrived  at  the  conclusion  that  what  we  need  is  legisla¬ 
tion  prescribing  a  much  longer  lease.  This  appears  to  me  the  wrong 
way  to  attack  the  subject..  What  we  ought  to  have  is,  unquestion¬ 
ably,  long  tenure.  This,  however,  is  essentially  different  from  a  long 


9 


lease.  The  long  lease  prescribes  conditions  and  ties  the  two  parties 
together.  The  conditions  may  change  and  one  party  or  the  other 
may  have  the  best  of  reasons  for  wishing  to  make  different  arrange¬ 
ments.  It  is  erroneously  believed  that  leases  in  England  are  for  the 
most  part  long.  As  a  matter  of  fact,  most  English  leases  are  for  a 
single  year.  The  tenure,  however,  is  distinctly  longer,  it  being  a  very 
usual  thing  for  the  same  tenant  to  remain  on  a  given  farm  for  a  life¬ 
time.  At  one  time  the  English  had  a  large  number  of  long  leases 
but  changing  prices  and  other  changing  conditions  led  to  their  aban¬ 
donment. 

What  we  can  learn  from  the  English  is  a  lesson  pertaining 
to  the  right  of  the  tenant  to  his  own  property  in  the  form  of  im¬ 
provements  made  upon  the  land.  In  the  United  States  tenants  accrue 
to  the  benefit  of  their  landlords  and  their  successors.  In  England 
the  law  gives  the  tenant  the  right  to  make  certain  improvements 
without  the  consent  of  the  landlord,  and  certain  others  with  the  con¬ 
sent  of  the  landlord,  at  the  same  time  protecting  him  in  the  ownership 
of  these  improvements,  even  though  the  tenure  be  changed. 

It  is  not  an  extremely  difficult  thing  to  calculate  approximately 
the  value  of  the  unused  portion  of  fertilizers.  These,  if  applied  by 
the  tenant  should  still  belong  to  him,  but  since  they  are  incorporated 
with  the  soil,  the  only  way  in  which  he  can  realize  upon  this  right 
is  by  a  cash  agreement.  We  have  reached  the  point  in  American 
agriculture  where  many  dollars  worth  of  fertilizer  must,  from  year  to 
year,  be  applied  to  the  land.  It  is  notorious  that  tenants  are  not 
much  interested  in  projects  of  this  kind.  One  of  the  first  things 
in  the  way  of  tenant  reform,  in  which  we  ought  to  interest  ourselves, 
is  the  security  of  the  tenant  in  his  right  to  the  unexhausted  values 
put  into  the  land  in  the  form  of  fertilizer. 

Tenant  right  may  well  go  further  than  to  secure  for  the  tenant 
a  right  to  the  unexhausted  excess  of  applied  fertilizer.  No  landlord 
should  have  a  right  to  put  a  tenant  upon  a  farm  on  which  the  fields 
are  in  a  demoralized  condition  and  the  houses  and  other  buildings 
unfit  for  occupancy.  Where  it  is  done,  the  tenant  should  have  a  right 
to  make  reasonable  improvements  and  charge  it  against  the  property. 
Any  movement  in  this  direction  will  have  to  be  made  cautiously. 
Otherwise,  there  is  danger  that  unscrupulous  or  unwise  tenants  will 
impose  greatly  upon  the  landlords.  Nevertheless,  the  question  is  not 
beyond  solution.  A  group  of  one’s  neighbors  may  always  be  relied 
upon  as  a  safe  jury  by  which  to  settle  controversies  of  this  kind. 

In  connection  with  the  question  of  short  or  long  tenancy,  we  must 
not  forget  that  a  large  part  of  our  American  farm  land  is  held 
speculatively.  A  remedy  for  this  evil  is  not  readily  forthcoming.  As 
long  as  land  continues  to  go  up  in  price  and  as  long  as  we  permit  pri¬ 
vate  ownership  of  the  land,  someone  is  likely  to  see  in  it  future  values. 
While  such  conditions  maintain,  farms  are  sure  to  sell  at  a  speculative 
price  somewhat  beyond  the  price  based  on  production.  Care  in  grant¬ 
ing  credit  will  discourage  speculation.  Possibly  some  forms  of  tax¬ 
ation  may  likewise  be  used  as  a  discouragement.  But  even  so,  we 
are  almost  sure  to  have  lands  held  speculatively  for  many  years  yet 


10 


to  come.  While  this  continues  to  be  the  case,  land  held  speculatively 
will  undoubtedly  be  rented  and  it  will  be  rented  on  short  time,  or  sub¬ 
ject  to  sale.  We  might  as  well  accept  the  fact  and  build  our  tenancy 
plans  about  it. 

We  are  often  asked  what  may  be  done  with  respect  to  the  immense 
holdings,  such  as,  for  example,  the  Scully  land.  It  seems  to  me  that 
we  would  be  justified  in  using  the  progressive  plan  of  taxation.  By 
putting  a  tax  a  little  heavier  on  large  holdings  and  still  a  little  heavier 
on  larger  holdings,  we  could  make  it  somewhat  less  desirable  for  men 
to  build  up  great  landed  estates.  In  my  own  opinion,  it  would  be 
wise  to  put  the  upper  limit  of  the  size  of  farms,  before  beginning  the 
progressive  tax,  so  high  that  substantially  every  efficient  operator  could 
go  ahead  with  his  plans  without  discouragement.  The  progressive  tax 
will  hit  some  men  whom  we  do  not  particularly  care  to  hit,  but  how 
to  avoid  it  is  a  hard  question.  The  landlord  who  is  wise  and  fair, 
whose  tenants  are  prosperous,  may  own  five  or  ten  thousand  acres 
of  land.  The  progressive  tax  will  subtract  from  him  at  least  some 
portion  of  his  returns.  The  damage  done  in  this  way  will  probably 
be  relatively  small,  whereas  the  good  that  would  result  by  discourag¬ 
ing  the  great  majority  of  landlords  from  accumulating  land,  running 
into  the  thousands  of  acres,  would  be  very  great. 

QUESTIONS  AND  ANSWERS. 

Q.  Would  you  like  to  secure  the  consent  of  the  landlord  to 
improvements  for  which  the  tenant  might  claim  compensation? 

A.  On  this  point,  we  shall  need  to  exercise  a  good  deal  of  cau¬ 
tion.  Probably  it  will  result  in  a  classification  of  improvements, 
much  like  the  English  plans,  whereby  the  tenant  may  make  certain 
improvements  without  the  consent  of  the  landlord  but  be  required  to 
obtain  his  consent  for  others. 

Q.  Would  you  permit  the  tenant  to  apply  phosphorus  to  the 
land  without  the  consent  of  the  landlord? 

A.  This  question  is  rather  too  technical  to  be  answered  at  the 
present  time,  but  in  the  main  I  would  say  that  where  it  is  a  clear 
case  that  the  land  is  genuinely  in  need  of  treatment  of  this  kind, 
tenants  should  be  permitted  to  make  it  without  the  landlord’s  consent. 
They  should  have  the  support  of  scientific  investigations  and  the  judg¬ 
ment  of  the  owners  of  similar  land. 

Probably  the  creation  of  a  tenant  right  such  as  we  have  been 
considering,  would  result  in  the  immediate  moving  of  a  large  num¬ 
ber  of  tenants  from  the  farms  which  they  now  occupy.  This  would 
not  be  an  unmixed  calamity.  It  would  no  doubt  result  in  putting  the 
tenants  of  higher  character  onto  the  land  owned  by  the  best  and 
most  progressive  landlords.  This,  in  itself,  would  be  a  distinct  gain. 

Q.  With  respect  to  the  progressive  tax  in  an  effort  to  keep  down 
the  size  of  holdings,  is  it  not  true  that  the  proper  size  varies  greatly 
with  the  type  of  farm? 

A.  Very  much.  Just  how  large  a  farm  ought  to  be,  probably 
none  of  us  is  able  to  say.  For  this  reason  it  would  be  well  to  put 
the  upper  limit  of  toleration  at  rather  a  generous  figure,  thus  letting 


11 


a  man  work  out  for  himself  the  question  of  size  of  farms  with  re¬ 
spect,  for  example,  to  100,  200  or  400  acres. 

Q.  Do  you  think  we  ought  to  have  legislation  on  the  subject 
of  absentee  landlords? 

A.  I  am  not  sure  that  I  know  just  how  to  define  an  absentee 
landlord.  The  thing  we  are  interested  in  is  not  the  exact  number 
of  miles  between  the  owner  and  his  farm.  It  is  rather  his  attitude 
toward  it.  I  have  known  an  instance  of  an  Englishman,  living  in 
Iowa,  who  kept  close  track  of  two  little  farms  he  had  inherited  at 
Staffordshire,  England.  As  a  matter  of  fact,  he  visited  the  farms 
more  frequently  than  the  owners  of  adjoining  farms  visited  their 
properties,  although  they  lived  in  London.  The  question  of  absentee¬ 
ism  is  rather  one  of  attitude  than  of  distance.  The  development  of 
the  tenant  right  and  the  imposition  of  progressive  tax  will  go  to  the 
heart  of  the  question,  whereas  legislation  against  absenteeism,  if  such 
is  likely,  will  fly  wide  of  the  mark. 

In  Wisconsin,  during  the  past  few  years,  we  have  made  several 
tenancy  studies  which  have  brought  out  facts  hardly  anticipated  by 
any  students  of  the  subject.  For  instance,  it  was  found  in  a  survey 
of  Iowa  County  ( Research  Bulletin  No.  40,  Merritt  and  Hatch )  that 
out  of  432  rented  farms,  173  were  rented  to  people  having  the  same 
surname  as  the  owner.  It  is  obvious  that  approximately  half  of  these 
tenants  were  members  of  the  landlord’s  family.  In  another  study, 
(. Research  Bulletin  No.  34,  Galpin  and  Hoag),  it  was  found  that  in 
Dane  County,  in  a  community  about  ten  miles  from  Madison,  the 
tenants  were  in  47  per  cent  of  the  instances,  related  to  the  owner. 
In  still  another  study,  not  yet  perfected,  it  was  found  that  over  40 
per  cent  of  the  tenants  in  Rock  and  Green  Counties,  were  members 
of  the  landlord’s  family.  Thus  it  appears  that  in  nearly  half  of  the 
cases,  tenancy  in  Wisconsin  is  of  an  incidental  character.  That  is  to 
say,  these  members  of  the  landlord’s  family  are  not  in  a  full  sense 
tenants.  They  are,  it  is  true,  operating  on  the  basis  of  a  tenant 
agreement,  but  the  great  majority  of  them  are  prospective  purchasers 
or  heirs  to  the  estate,  and  when  they  become  purchasers  it  is  nearly 
always,  under  these  circumstances,  on  favorable  terms. 

Q.  How  long  has  the  land  been  under  cultivation  in  Green  and 
Rock  Counties? 

A.  From  60  to  80  years,  not  much  of  it  over  60  years. 

Q.  What  percentage  of  this  land  was  recently  developed? 

A.  Not  very  much.  In  these  sections  the  cultivated  acreage 
was  approximately  as  large  fifty  years  ago  as  now.  In  other  parts 
of  southern  Wisconsin  the  process  of  clearing  land  has  continued  up 
to  the  present  time. 

Q.  What  relation  has  credit  to  tenancy? 

A.  It  seems  to  me  that  the  relationship  is  very  close.  In  the 
whole  State  of  Wisconsin,  credit  conditions  are  probably  as  good 
as  are  to  be  found  in  any  western  state.  This  gives  one  reason  why 
tenancy  in  Wisconsin  is  relatively  low.  Of  course  the  type  of  agricul¬ 
ture  is  of  equal,  if  not  of  more  importance  in  this  respect. 

Q.  Is  any  special  legislation  desirable  in  connection  with  the 
status  of  the  second  mortgage? 


12 


A.  It  seems  to  me  the  second  mortgage  should  be  given  cer¬ 
tain  rights  which  it  does  not  have.  The  fact  that  the  Federal  Farm 
Loan  extends  over  such  a  long  period  of  years  requiring  small  pay¬ 
ments  annually  makes  it  possible  for  enterprising  farmers  to  take  care 
of  a  second  mortgage  in  the  meantime. 

>The  relation  of  credit  to  tenancy  is  brought  out  by  the  study 
above  referred  to  which  we  still  have  in  progress,  in  Green  and  Rock 
Counties.  It  was  found  that  of  the  credit  required  in  the  purchase 
of  the  first  farm,  by  the  men  interviewed,  83.5  per  cent  was  furnished 
by  relatives  and  retired  farmers.  In  almost  all  cases,  the  credit  fur¬ 
nished  by  retired  farmers  was  in  the  nature  of  a  loan  left  upon  a  farm 
purchased  from  them. 

Is  it  not  clear  if  83.5  per  cent  of  the  money  needed  for  these 
purchases  made  by  young  men  can,  without  organization,  be  furnished 
by  and  within  the  local  communities,  that  through  some  reasonable 
organization  a  very  large  part  of  all  such  demands  could  be  met 
locally  throughout  the  prosperous  part  of  the  United  States?  Even 
if  it  should  fall  to  50  per  cent  it  would  supplement  the  loans  ob¬ 
tainable  from  Federal  Farm  Loan  banks  most  admirably.  It  seems 
that  we  have  not  yet  learned  how  to  use  our  available  local  efforts  in 
financing  the  young  farmers. 

Q.  Do  you  consider  that  some  tenancy  is  necessary  and  de¬ 
sirable?  Could  you  name  the  percentage  that  would  be  ideal? 

A.  It  seems  to  me  that  some  tenancy  is,  by  all  means,  desirable. 
So  long  as  tenancy  can  be  kept  at  a  fairly  low  proportion  of  the  farms 
of  the  community  it  may  act  as  a  stepping  stone  to  ownership.  It 
is  not  reasonable  to  expect  a  beginner  to  buy  a  farm.  So  long  as 
we  have  farmers  retiring  from  active  life  who  still  are  willing  to 
retain  the  ownership  of  their  farms,  why  should  not  these  farms  be 
rented  to  the  young  men  of  the  community? 

As  long  as  tenancy  remains  below  20  or  30  or  possibly  40  per 
cent,  we  have  no  occasion  for  alarm.  If  it  rises  above  the  latter 
figure  it  is  certain  that,  in  many  communities,  in  whole  counties  with¬ 
out  doubt,  tenancy  is  going  to  predominate.  This  is  when  the  evils 
of  it  always  come  to  the  front.  If  in  Illinois,  the  41  per  cent  of  . 
tenancy  reported  in  1910  had  been  evenly  distributed  over  the  State, 
there  would  have  been  no  great  stir  concerning  it ;  but  since,  on  the 
contrary,  tenancy  at  that  time  rose  to  about  70  per  cent  in  some 
counties,  it  was  very  properly  viewed  with  alarm. 

Q.  A  suggestion  has  been  made  that  the  legislature  make  an 
appropriation  to  the  University  of  Illinois  for  some  survey  work. 
What  do  you  think  of  it? 

A.  There  is  nothing  you  could  do  that  would  be  more  worth 
while  than  to  bring  this  about.  The  University  should  be  able  to 
conduct  the  survey  expeditiously  and  intelligently.  I  believe  it  would 
do  it.  What  we  need  in  this  case  more  than  anything  else  is  in¬ 
formation. 

O.  In  your  survey,  is  it  not  true  that  the  83  per  cent  of  funds 
obtained  locally  would  pertain  to  those  who  purchased  recently,  rather 
than  going  back  to  early  years? 


A.  Yes  sir.  We  decided  to  do  what  we  could  with  the  appro¬ 
priation  we  had  at  the  time.  As  a  consequence  we  confined  our 
inquiry  to  the  past  ten  years,  although  it  is  more  than  likely  that 
the  one  question  pertaining  to  the  source  of  funds  applied  to  the 
owners  now  on  the  land,  lapping  back  in  an  occasional  instance  beyond 
the  ten  years.  We  asked  the  question,  “What  per  cent  of  your  pres¬ 
ent  wealth  is  attributable  to  increase  in  land  values?” 

O.  Would  they  eliminate  from  their  answer  the  value  of  actual 
improvements  ? 

A.  They  tried  to  do  so.  That  it  was  done  to  the  fullest  extent 
is  improbable.  The  answer  they  gave  to  the  question  was,  on  an 
average,  36  per  cent.  •  Probably  this  is  less  than  would  have  been 
the  case  had  similar  inquiry  been  made  within  the  typical  parts  of 
Illinois.  Land  values  have  not  risen  as  high  in  Wisconsin  as  in  your 
State. 

Q.  Did  you  make  any  compilation  to  compare  the  rented  farms 
to  farms  operated  by  owners? 

A.  We  have  in  our  schedules  something  that  might  be  used 
in  that  way,  but  thus  far  no  analysis  has  been  made. 

Q.  In  our  corn  belt  districts  we  are  very  much  interested  in 
knowing  whether  rented  farms  are  growing  as  much  clover  as  other 
farms. 

A.  An  answer  to  that  question  can  be  obtained  from  the  1900 
census  for  that  period.  It  is  probably  true  that  much  less  clover 
is  being  grown  on  the  rented  farms.  This  is  a  question  which  the 
proposed  survey  should  bring  out. 

Q.  From  the  standpoint  of  credit,  have  you  made  a  study  of 
interest  rates  on  dairy  farms  and  compared  it  with  the  rates  on 
other  farms  in  Wisconsin? 

A.  We  have  not.  Nevertheless,  from  the  studies  made,  it  is  al¬ 
together  probable  that  little,  if  any,  difference  would  be  found.  Wis¬ 
consin  is  not  a  great  grain  growing  state.  We  have,  however,  found 
that  the  rate  of  interest  varies  with  the  security  and  that  tobacco 
tenants,  for  example,  pay  a  somewhat  higher  rate  than  dairy  ten¬ 
ants.  This  is  a  partial  answer  to  the  question.  The  occasion  for  the 
difference  is  obvious.  A  tobacco  grower  frequently  has  very  little 
in  the  way  of  tangible  assets,  whereas  a  dairy  farmer,  whether  a 
tenant  or  owner,  is  a  fixture  in  the  community. 


14 


DISCUSSION  OF  FEDERAL  LAND  BANK. 


Questions  asked  Mr.  Danforth  and  answers  made  by  him : 


Q.  Mr.  Danforth,  how  long  has  the  Federal  Land  Bank  been 
running  ? 

A.  Since  March  1,  1917. 

Q.  Thus  far,  in  your  experience  in  this  matter,  what  has  been 
your  experience  in  the  matter  of  getting  the  man  started  to  buying 
his  first  land,  that  is,  a  man  of  moderate  means.  Is  there  a  very 
large  percentage  of  loans  made  to  men  of  this  class? 

A.  It  is  very  difficult  to  tell  accurately  what  percentage  of  our 
loans  are  made  to  men  of  this  class,  but  a  very  rough  estimate  would 
be  about  40  per  cent.  The  greatest  difficulty  in  arriving  at  an  accurate 
estimate  is  due  to  the  fact  that  many  applications  which  state  that 
the  proceeds  of  that  particular  loan  are  to  pay  an  existing  indebted¬ 
ness,  show,  on  closer  investigation  or  in  the  appraiser’s  report,  that 
the  indebtedness  is  in  reality  only  a  contract  to  buy  land.  The  appli¬ 
cant,  at  the  time  of  entering  into  the  contract,  had  in  mind  securing 
the  necessary  money  through  a  Federal  Land  Bank  loan.  In  many 
other  cases  the  indebtedness  is  due  on  land  quite  recently  purchased 
in  anticipation  of  a  Federal  Land  Bank  loan.  Many  landless  men  with 
limited  capital  have  been  able  to  purchase  farms  through  assistance 
rendered  by  the  Federal  Land  Bank.  This  has  been  accomplished 
by  inducing  the  grantor  to  accept  a  second  mortgage  in  payment  of 
the  balance  due  over  and  above  the  amount  supplied  by  the  Federal 
Land  Bank, — the  interest  returns  on  the  cash  payment  and  second 
mortgage  giving  the  grantor  a  much  larger  net  return  than  the  amount 
formerly  received  as  rent.  We  find  that  quite  often  the  local  banker 
can  arrange  to  place  a  second  mortgage  for  the  applicant. 

Q.  How  big  were  the  farms  they  bought? 

A.  That  varies  greatly  in  different  sections  of  the  country,  and 
depends  a  great  deal  on  the  system  of  farming. 

Q.  There  is  a  sort  of  general  notion  among  a  good  many  fel¬ 
lows  who  have  been  thinking  about  this  that  the  Federal  Land  Bank 
loan  is  a  very  good  thing  to  buy  the  second  farm  with,  but  it  wouldn’t 
reach  the  man  with  a  small  amount  of  capital  who  was  buying  his 
first  land.  Have  you  many  applications  from  men  who  already  have 
one  farm? 

A.  Yes  sir.  Quite  a  number  of  applications  come  from  men 
who  already  own  farms,  but  what  percentage  I  am  unable  to  say. 
In  some  instances  we  try  to  discourage  borrowers  from  buying  addi¬ 
tional  land,  particularly  if  our  appraisement  discloses  that  the  appli¬ 
cant  already  has  more  land  than  he  is  equipped  to  handle  properly 
and  economically.  We  often  find  cases  where  applicants  own,  say 


15 


160  acres  of  land,  which  was  purchased  on  credit  some  ten  or  twelve 
3^ears  ago,  and  in  their  anxiety  to  liquidate  the  indebtedness,  the  land 
has  been  allowed  to  run  down  in  fertility,  and  the  improvements  in  a 
bad  state  of  repair.  In  addition  to  this  very  little,  if  any,  effort  has 
been  made  to  tile  or  otherwise  develop  the  property.  In  such  cases, 
we  recommend  that  the  money  borrowed  be  used  in  building  up  and 
developing  the  farm  already  owned  in  preference  to  using  the  money 
in  the  purchase  of  additional  land. 

Q.  In  your  experience  thus  far  in  administering  the  affairs  of 
the  Federal  Land  Bank,  and  you  are  about  as  familiar  as  anyone  with 
the  agricultural  conditions  in  Illinois,  do  you  believe  that  after  we 
get  down  to  what  we  are  all  talking  about,  that  the  Federal  Land  Bank 
can  be  developed  and  will  be  developed  so  that  it  is  going  to  meet 
the  needs  of  a  man  without  capital? 

A.  No.  With  limited  capital,  yes.  At  some  later  date  it  may 
appear  advisable  to  amend  the  Farm  Loan  Act  so  that  it  would 
be  possible  to  loan  in  excess  of  the  present  limit  of  50  per  cent  of 
the  appraised  value  of  the  land.  In  my  judgment,  before  this  can 
be  done,  however,  land  values  should  become  stabilized  in  this  country 
as  they  are  in  Europe.  As  long  as  speculation  enters  into  the  sale 
value  of  land,  as  it  does  at  present,  I  would  not  deem  it  advisable  to 
increase  the  50  per  cent  basis. 

Q.  Then  if  land  values  become  stabilized  and  get  to  the  point 
where  speculative  value  is  out  of  it,  the  Federal  Land  Bank,  properly 
administered,  would  meet  the  need  of  the  man  starting  in  to  buy 
a  farm  and  in  time  pay  for  it? 

A.  Yes  sir. 

Q.  Do  you  think  that  a  conservative  policy  should  be  followed 
until  that  time  is  reached,  the  Federal  Government  to  loan  80  per  cent 
to  90  per  cent  of  the  value  of  the  land? 

A.  I  do. 

Q.  There  is  a  notion  in  Illinois  of  the  advisability  at  this  time 
of  the  State  going  into  the  Farm  Loan  business  such  as  South  Dakota. 

A.  What  would  be  the  purpose  of  the  State  going  into  the  Farm 
Loan  business?  Would  it  loan  money  for  the  purpose  of  agricul¬ 
tural  development,  or  would  the  idea  be  to  make  liberal  loans  to  land¬ 
less  men  and  encourage  the  purchase  of  land  on  credit  at  the  present 
high  prices? 

Q.  Just  a  general  proposition.  You  know  the  general  plan  of 
South  Dakota,  don’t  you? 

A.  If  the  plan  is  to  loan  the  farmer  enough  money  to  buy  these 
lands  on  credit  at  the  present  prices,  it  will,  in  my  judgment,  do 
more  harm  to  agriculture  than  good.  I  think  in  the  past  it  has  been 
too  easy  to  borrow  money  for  the  purpose  of  purchasing  land,  and 
too  little  money  has  been  used  for  the  purpose  of  developing  agri¬ 
culture. 

Q.  Studies  that  have  been  made  of  operating  farms  show  that 
probably  160  acres  is  a  small  sized  farm.  A  160  acre  farm  in  Illi¬ 
nois  costs  probably  $50,000.  Ten  thousand  dollars  is  too  small  a 
proportion  of  that  to  be  very  great  assistance  in  aspiring  to  owner- 


16 


ship.  Is  there  a  possibility  of  getting  that  limit  raised,  say  to  $20,000 
or  $25,000? 

A.  While  it  is  true  that  $10,000  is  not  sufficient  to  enable  a 
man  to  buy  a  160  acre  farm  in  the  Corn  Belt  of  Illinois,  I  am  not 
ready  to  admit  that  160  acres  is  a  small  sized  farm  for  a  proper  agri¬ 
cultural  unit,  and  especially  for  the  man  buying  his  first  farm  on  credit. 
A  great  many  tenants  have  succeeded  in  accumulating  five  or  ten 
thousand  dollars  over  a  period  of  years  and  have  arrived  at  the  point 
where  they  desire  to  become  land  owners.  I  believe  these  men  should 
be  encouraged  in  purchasing  a  small  tract  of  land,  say  80  acres.  If 
they  were  inclined  to  be  thrifty  and  would  practice  intensive  agri¬ 
culture,  it  would  not  be  long  before  they  would  be  in  a  position  to 
finance  the  purchase  of  another  80. 

Q.  Agriculture  is  not  efficient  enough.  We  have  been  letting 
our  boys  who  have  the  most  brains  and  most  ability  go  to  other  states 
and  into  other  lines  of  business  and  have  been  keeping  on  the  farm 
boys  that  cannot  do  anything  else.  That  is  the  reason  agriculture  is 
not  50  per  cent  efficient. 

A.  I  think  the  condition  described  is  due  to  the  fact  that  too 
much  attention  has  been  given  to  legislation  favoring  the  development 
of  industry,  and,  until  recently,  practically  no  attention  whatever  has 
been  given  to  the  development  of  agriculture.  The  result  has  been 
that  industry  has  developed  and  become  so  profitable  that  it  has  drawn 
from  agriculture  both  capital  and  labor.  This  is  very  conclusively 
shown  by  the  census  returns.  The  only  way  to  keep  the  efficient 
man  on  the  farm  is  to  make  farming  profitable  and  attractive. 

Q.  What  we  are  interested  in  particularly  is  the  means  of  help¬ 
ing  a  man  who  hasn’t  any  land  at  all  to  get  some.  i 

A.  That  idea  is  very  creditable,  but  in  my  judgment  that  man 
must  first  prove  his  ability  to  help  himself.  A  man  who  is  energetic 
and  a  good  manager  can  rent  a  farm  and  in  time  accumulate  enough 
money  to  make  the  first  payment  on  a  small  farm.  This,  I  believe, 
should  be  encouraged  in  every  way  possible,  and  all  legitimate  assist¬ 
ance  should  be  extended  to  him  by  the  Government.  This  is  being 
done  by  the  Federal  Land  Bank,  and  the  benefits  can  be  extended  from 
time  to  time  as  the  conditions  justify.  I  believe  State  laws  could  be 
enacted  which  would  help  the  situation  considerably. 

O.  Along  the  line  of  reimbursing  a  man  for  improvements  put 
on  the  farm,  do  you  think  it  would  be  possbile  to  devise  a  law  fitted 
to  Illinois  conditions  that  would  provide  for  the  reimbursement  of 
a  tenant  at  the  expiration  of  his  period  of  tenure  for  the  better  con¬ 
dition  in  which  he  might  leave  the  farm? 

A.  Yes  sir,  I  do. 

O.  Take  the  Scully  estate  for  instance.  While,  a  renter  on  the 
Scully  estate  probably  doesn’t  pay  more  than  2  per  cent  of  what  that 
land  would  sell  for,  yet  the  annual  rental  pays  40  per  cent  to  50 
per  cent  on  that  land.  There  is  no  desire  to  sell  it  or  dispose  of  it. 

A.  It  seems  to  me  that  some  law  could  be  enacted  which  would 
make  it  unprofitable  to  handle  land  in  the  manner  in  which  the  Scully 
estate  is  handled.  This  would  force  them  to  sell.  I  am  not,  however, 
prepared  to  say  that  tenantry  is  altogether  bad.  Many  farms  are 


17 


much  better  handled  under  the  control  of  so-called  absentee  landlords, 
than  they  could  possibly  be  under  the  control  of  the  man  who  is 
renting  the  land  as  a  tenant.  This,  however,  does  not  appear  to  be 
the  case  in  the  Scully  estate.  There  is  a  very  great  difference  iit 
the  net  income  of  different  tenants.  I  have  some  who  are  making 
good  money  and  saving  it ;  others  who  have  been  on  the  same  farm 
from  18  to  20  years  and  have  nothing  more  than  when  they  started. 
It  would  be  very  difficult  to  pass  a  law  that  would  make  a  land  owner 
out  of  the  latter  man.  It  is  possible  that  a  graduated  tax  based 
on  the  amount  of  land  owned  might  have  a  tendency  to  reduce  large 
holdings. 

Q.  What  is  your  definition  of  absentee  land  owner? 

A. That  is  a  very  hard  question  to  answer,  but  I  think  the  gen¬ 
erally  accepted  definition  is  the  land  owner  who  resides  at  some  dis¬ 
tance  from  his  land  and  gives  little  attention  to  its  cultivation,  as 
distinguished  from  the  man  who  lives  in  close  proximity  to  the  land 
and  gives  the  cultivation  of  the  farm  careful  supervision,  although 
he  is  not  farming  it  himself. 

Q.  It  is  a  pretty  hard  thing  to  frame  a  law.  In  a  good  many 
cases  the  farmer  retires,  rents  his  farm  and  takes  a  personal  interest 
in  his  land.  He  does  a  lot  of  work  for  which  he  gets  no  direct  pay. 
He  gives  his  tenants,  often  young,  the  benefit  of  his  mature  judgment 
and  experience.  On  the  other  hand,  a  good  many  men  who  move  to 
the  city  try  to  get  the  last  dollar  out  of  the  land  so  that  the  rent  will 
support  them  in  town. 

Are  you  familiar  with  the  needs  in  California?  I  believe  Gover¬ 
nor  Allen  contemplates  doing  that  same  thing  in  Kansas,  buying  land 
and  selling  it.  Would  there  be  any  advantage  in  the  State  of  Illinois 
doing  some  of  that  work  in  southern  Illinois  to  put  it  on  a  more 
productive  basis  ?  It  is  pretty  discouraging  for  the  best  farmer  to 
build  up  the  land  out  of  the  proceeds  of  the  land  itself.  Would 
it  be  advisable  for  the  State  to  buy  some  of  that  land? 

A.  It  occurs  to  me  that  the  State  through  the  Agricultural  Col¬ 
lege  and  the  Experiment  Station,  in  cooperation  with  the  county  agents 
appointed  under  the  Smith-Lever  Act,  are  doing  good  work  in  south¬ 
ern  Illinois,  and  the  Federal  Land  Bank  of  St.  Louis  is  endeavoring 
to  cooperate  with  these  agencies  in  every  way  possible.  I  do  not 
believe  that  much  more  could  be  accomplished  at  the  present  time  by 
the  State  of  Illinois  buying  this  land.  It  is  not  so  much  a  question  of 
ownership  as  it  is  of  intelligent  cultivation  and  management.  Land 
can  be  bought  very  cheaply  in  southern  Illinois,  and  by  the  use  of  lime¬ 
stone  these  farms  can  be  operated  profitably. 

Q.  How  much  do  you  loan  on  southern  land  per  acre? 

A.  I  suppose  you  mean  southern  Illinois.  There  are  several 
types  of  land  in  what  is  known  as  “Southern  Illinois”,  and  it  varies 
greatly  in  value.  The  almost  universal  type  of  hardpan  land,  such 
as  found,  for  example,  in  Wayne  County,  is  worth  from  $25  to  $50  an 
acre.  In  some  cases  where  it  has  been  well  farmed  and  properly 
developed,  it  is  worth  more.  In  all  the  loans  we  are  making  in  that 
section  of  the  country,  we  are  trying  to  encourage  the  applicant 


18 


in  using  a  portion  of  his  loan  in  the  purchase  of  limestone  and  the 
erection  of  necessary  buildings,  etc. 

Q.  After  you  have  done  that  and  developed  that  section,  the 
same  problem  of  tenancy  will  run  up  in  the  future. 

A.  Yes  sir.  In  my  judgment  we  will  always  have  that  problem, 
and  where  you  increase  the  returns  from  land,  tenantry  is  bound 
to  increase.  Where  the  land  is  of  very  poor  quality  and  the  returns 
proportionately  low,  tenantry  does  not  exist  to  such  a  large  extent 
because  the  returns  are  not  sufficient  to  support  both  landlord  and 
tenant. 

Q.  Suppose  you  apparently  are  not  in  favor  and  do  not  see  any 
adequate  reason  for  any  State  establishing  a  loan  system ;  suppose 
this  commission  brings  an  adverse  recommendation  on  that  propo¬ 
sition  and  suppose  that  after  that  the  Supreme  Court  of  the  United 
States  renders  an  adverse  opinion  on  your  case,  the  Federal  Loan 
system  is  knocked  out,  might  not  a  condition  arise  where  it  would  be 
desirable  for  the  states  to  carry  on  the  work? 

A.  Yes  sir.  I  might  say  here  in  answer  to  some  of  the  former 
questions  that  one  of  the  things  that  contributes  considerably  to  the 
labor  shortage  on  the  farm,  is  the  lack  of  accommodations  for  a  farm 
hand  who  wants,  to  get  married.  When  a  young  farm  hand  arrives 
at  that  age  and  takes  unto  himself  a  wife,  there  is  no  further  use 
for  him  on  the  farm.  If  the  farmer  would  build  a  small  house  sufficient 
to  accommodate  his  hired  help  and  their  families,  we  would  find  a 
great  many  more  '“A-Number  1”  farm  hands  going  back  to  the  farm. 

Q.  How  many  loans  have  gone  to  landless  men? 

A.  This  is  a  question  I  could  not  answer  now,  but  I  shall  try 
to  get  the  information  and  furnish  it  later.  I  should  say  approxi¬ 
mately  about  40  per  cent  of  the  total  loaned  to  buy  land. 


PERFECTING  THE  FARM  LEASE. 

Questions  asked  and  statements  made  by  Mr.  Lloyd : 

I  would  like  to  say,  in  beginning,  that  I  regard  the  experiences 
that  I  might  give  you  today  as  being  largely  the  result  of  coming  in 
contact  with  farmers  first-hand  in  the  corn  belt  during  the  past  ten 
years.  We  have  made  a  study  of  farm  tenancy  with  two  ideas  in 
mind.  One  was  to  perfect  the  farm  lease  in  order  that  we  might 
make  it  pleasant  and  profitable  for  a  man  while  he  is  a  renter  and 
shorten  the  period  of  tenancy  that  way,  and  the  other  idea  was  to 
promote  farm  ownership  as  early  in  life  as  we  can.  Our  studies  of 
the  farm  lease  taught  us  to  emphasize  these  two  things ;  that  the  first 
requisite  of  an  acceptable  lease  is  that  it  shall  call  for  a  profitable 
type  of  farming  and  second,  that  it  shall  call  for  an  acceptable  division 
of  returns.  In  speaking  of  the  first  point,  if  a  man  is  tied  down  hand 
and  foot  with  a  lease  so  he  cannot  utilize  his  time  to  good  advantage, 
he  doesn’t  make  money  for  himself  nor  for  the  owner  of  the  land. 
So  our  first  purpose  is  to  determine  what  is  a  profitable  type  of  farm¬ 
ing  for  the  different  localities  in  the  State  in  which  we  are  working 
so  that  we  can  suggest  to  these  renters  and  landlords  the  type  that  is 
most  profitable,  that  will  utilize  the  land  and  the  capital  and  the 
labor  to  the  fullest  extent.  We  believe  that  is  fundamental.  The  sec¬ 
ond  feature  of  determining  what  is  an  acceptable  lease,  is  perhaps 
best  obtained  by  cost  accounting,  finding  out  what  each  furnishes  and 
therefore  what  each  should  receive.  Unless  you  do  that  you  are  guess¬ 
ing  in  trying  to  determine  an  acceptable  basis  for  a  division  of  the 
profits  in  farming. 

Now  I  hold  that  those  two  studies  are  fundamental  in  your  State 
in  handling  farm  leases.  I  believe  great  improvement  can  result 
by  first  determining  what  is  the  most  profitable  farming  in  the  differ¬ 
ent  parts  of  the  State,  because  the  State  differs,  soil,  market  condi¬ 
tions,  etc.  are  different,  and  the  type  of  farming  should  be  adjusted 
to  those  conditions. 

On  cheap  land  where  the  returns  are  meager  compared  with  fer¬ 
tile  land,  the  renter  is  apt  to  pay  as  high  a  per  cent  of  the  crops  as 
he  pays  on  the  fertile  land. 

A  word  or  two  in  the  way  of  preface  now  to  the  second  point, 
making  it  possible  for  the  renter  to  become  an  owner  earlier  in  life 
than  is  the  case  at  the  present  time.  In  the  summer  of  1913  we  made 
a  study  of  more  than  200  farms  that  were  operated  by  owners.  We 
selected  these  200  farms  from  about  1,000  farms.  These  200  men 
had  not  received  any  inheritance.  They  were  on  the  first  farms  they 
ever  owned.  Our  purpose  was  to  determine  the  opportunities  of  own¬ 
ership  by  what  we  might  call  a  historical  study.  We  found  that  a 
generation  ago  men  bought  farms  when  they  had  a  net  worth  of 


$1,800  and  they  were  29  years  old  on  an  average.  A  generation 
later,  or  between  1910  and  1914,  men  bought  farms  when  they  had 
$7,800  saved,  or  $6,000  more  than  a  generation  before;  that  they 
were  34  years  of  age  on  an  average  when  they  became  owners.  That 
is,  the  age  of  ownership  had  been  postponed  about  5  years  in  the 
generation.  The  net  worth  of  these  men  who  had  acquired  land 
recently  was  high  compared  to  the  men  who  had  acquired  farms  a 
generation  ago,  when  we  consider  the  number  of  years  that  each 
had  been  of  a  productive  age,  over  say  21  years  old.  Each  class 
had  done  well  but  ownership  was  gradually  slipping  away,  although 
financially  these  renters  were  well  off.  Bear  in  mind,  these  men  did 
not  receive  any  inheritance  and  they  were  on  the  first  farms  they  ever 
owned.  The  advance  in  the  price  of  land  is  included  but  we  can 
easily  go  back  over  the  period  in  which  these  men  owned  land  and  get 
the  advance,  on  the  average,  that  took  place  and  can,  in  a  rough 
measure,  perhaps  determine  the  savings  from  the  annual  returns 
of  farming.  The  point  I  desire  to  bring  out  is  this:  That  this  study 
was  made  in  1913  and  land  has  increased  100  per  cent  in  that  part 
of  Iowa  since  that  time,  that  if  ownership  had  been  postponed  5  years 
in  a  generation  it  is  quite  probable  that  it  has  been  postponed  5 
more  years  since  that  time. 

ABILITY  OF  RENTERS  AND  OWNERS. 

A  question  was  asked  this  morning  concerning  the  ability  of  rent¬ 
ers  compared  to  owner-operators  in  farming.  A  comparison  of  the 
labor  income  of  renters  and  owner-operators  shows  that  renters  under 
30  years  of  age  make  just  as  high  returns  in  farming  for  their  labor 
as  do  owner-operators  at  40  years  of  age.  That  is,  renters  are  not 
becoming  owners  as  early  in  life  as  it  would  be  profitable  to  society 
to  have  them  become  owners.  I  think  it  is  iniportant  that  these 
renters  do  not  lose  the  hope  of  becoming  owners  of  farms.  I  believe 
in  having  renters.  I  think  it  isn’t  socially  desirable  to  do  away  with 
renters,  because  I  find  that  three-fourths  of  these  men  under  35  years 
of  age  who  are  farmers  are  renters  and  three-fourths  of  the  men 
over  50  years  of  age  are  owners  of  land,  showing  that  the  younger 
men  are  renters  and  they  do  climb  the  ladder  and  become  owners  later 
on. 

But  I  think  we  have  a  new  situation  with  this  rapid  increase 
in  the  price  of  land  during  the  past  2  decades.  Now  why  do  I  say 
that?  I  think  the  significance  of  farm  ownership  has  changed  dur¬ 
ing  that  time ;  that  our  credit  facilities  have  not  changed  to  meet 
the  situation.  From  1850  to  1900  we  are  quite  safe  in  saying  that  the 
increase  in  the  price  of  land,  say  in  Iowa,  from  $6.09  an  acre  to 
$43.31  an  acre  was  pay  for  improvements  made  on  the  land  and  part 
pay  in  a  form  of  annual  returns  for  labor. 

In  Iowa  we  have  attempted  to  make  a  little  comparison  which 
I  think  is  about  fair.  Suppose  two  brothers  owned  land  in  1850.  One 
decided  to  sell  his  farm  at  $6.09  an  acre  and  work  as  a  farm  hand. 
He  put  his  money  out  on  interest  at  4  per  cent  compounded  annually. 
As  a  farm  hand  he  would  be  furnished  a  house  to  live  in,  the  living 


21 


furnished  by  the  farm,  and  he  would  be  paid  wages.  The  man 
who  owned  the  land  would  get  pay  for  his  labor  and  any  additional 
amount  would  probably  go  into  making  improvements  during  that 
period  from  1850  to  1900.  At  the  end  of  that  time  the  hired  man 
would  have  $43.35  for  every  $6.09  he  deposited  at  4  per  cent  com¬ 
pounded  annually,  while  the  owner  of  the  farm  would  have  land  val¬ 
ued  at  $43.31.  The  point  I  desire  to  make  is  that  during  a  long  per¬ 
iod  of  years  the  increase  in  the  value  of  land  that  we  can  expect 
is  about  the  same  as  money  put  out  at  4  per  cent  compounded  an¬ 
nually  ;  that  during  the  decade  from  1900  to  1910  there  was  an 
increase  of  more  than  100  per  cent  in  the  market  price  of  an  Illinois 
farm ;  that  from  1910  to  1920  there  was  another  increase  of  some¬ 
thing  like  100  per  cent.  1  haven’t  the  figures  and  would  be  glad 

to  be  corrected  if  wrong.  Illinois  land  sold  for  about  $204  per  acre 

as  of  January  1,  1920.  'The  value  of  land  alone  does  not  entirely  tell 
the  story.  At  the  same  time  that  land  has  advanced  in  price.  A 
profitable  sized  farm  has  increased  in  area  so  that  the  farm  that  a 
man  wishes  to  buy  today  compared  with  a  generation  ago  not  only 

costs  more  per  acre  but  the  farmer  desires  more  acres  in  order  to 

take  advantage  of  recent  improvements  in  farming. 

That  leads  me  into  a  subject  which  I  regard  as  fundamental. 
The  National  ideal  in  this  country  is  the  greatest  production  per  man 
and  not  the  greatest  production  per  acre.  We  might  have  legislation 
in  Illinois  or  in  Indiana  that  would  give  each  man  a  farm.  It  would 
be  a  small  farm  but  in  doing  so  we  would  sacrifice  materially  the 
amount  of  food  that  can  be  produced  per  man  although  temporarily 
we  might  increase  the  amount  of  food  produced  per  acre.  I  hold 
that  it  is  just  as  much  to  the  interest  of  the  consumer  as  it  is  to  the 
interests  of  the  producer  to  have  farmers  get  the  maximum  amount 
of  returns  for  their  labor.  In  other  words,  our  country  folk  are 
going  to  prosper  in  proportion  as  they  can  increase  the  production 
per  man  from  one  generation  to  another.  Civilization  is  based  on 
that  principle,  that  a  son  shall  be  able  to  produce  more  than  his 
father.  With  our  expansive  type  of  farming  in  the  corn  belt  we 
are  taking  full  advantage  of  that  fact.  The  use  of  a  tractor  means 
that  a  man  uses  his  labor  more  effectively.  In  all  our  tenancy  legis¬ 
lation  that  must  be  kept  in  mind,  that  we  want  our  farms  to  remain 
that  size  which  will  utilize  man  power  to  the  fullest.  I  wouldn’t  ad¬ 
vocate  any  kind  of  legislation  which  would  lessen  the  production 
per  man.  It  means  that  if  we  are  going  to  promote  farm  ownership 
there  are  two  ways  of  doing  it.  One  is  to  make  leases  more  accept¬ 
able.  The  other  is  to  furnish  credit  to  renters  before  they  lose  the 
hope  of  becoming  farm  owners  so  they  can  purchase  land  and  farm 
for  themselves.  I  believe  that  leases  can  be  perfected  so  renters  can 
be  made  very  happy  and  farming  can  be  made  very  profitable ;  that 
the  interests  of  the  landlord  and  the  renter  and  the  land  or  society 
can  be  protected  with  a  good  lease.  On  the  other  hand,  if  farm 
ownership  is  postponed  so  late  in  life  that  men  lose  the  hope  of 
becoming  owners,  we  have  an  undesirable  situation. 

Now  how  are  these  things  to  be  brought  about?  We  have 
found  in  our  studies  that  the  stock  share  lease  not  only  furnishes  an 


22 


opportunity  for  more  cooperation  between  the  landlord  and  the  renter, 
breaking  down  that  antipathy  which  often  exists  between  the  landlord 
and  the  renter  but  it  also  furnishes  the  needed  capital  to  equip  and 
operate  a  farm.  It  is  my  conviction  that  more  stock  share  renting 
in  this  State  would  greatly  increase  the  profits  in  farming.  Surveys 
made  showing  the  relative  profitableness  of  this  method  of  renting 
lead  us  to  conclude  that  the  soil  fertility  is  not  only  better  maintained 
on  stock  share  rented  farms,  but  the  early  returns  are  greater.  Now 
there  is  a  limited  application  to  this  method  of  renting  but  I  do  think 
a  more  general  use  of  it  should  be  encouraged. 

QUESTIONS  AND  ANSWERS. 

Q.  In  saying  that  the  returns  are  greater  under  the  stock  share 
lease  can  you  compare  that  definitely?  Isn’t  it  probably  true  that  on 
farms  operated  under  that  system  that  both  the  landlord  and  tenant 
are  more  above  the  average? 

A.  I  find  in  our  study  of  different  methods  of  renting  that 
the  localities  differ  so  much  in  the  type  of  men  who  use  different 
kinds  of  leases  that  we  are  hardly  justified  in  making  that  conclu¬ 
sion.  I  cannot  answer  for  Illinois  but  I  feel  fairly  safe  in  making 
this  statement,  that  the  best  type  of  renters  in  Iowa  are  cash  renters. 
The  ladder  which  they  climb  to  ownership  is  often  along  this  way, 
hired  man ;  share  renter,  either  stock  share  or  crop  share ;  then  cash 
renter  and  then  farm  owner.  In  other  words,  as  they  acquire  more 
experience  and  more  capital  they  finally  rent  for  cash  and  on  those 
farms  leases  are  fairly  satisfactory.  It  is  in  some  of  the  other  areas 
where  renters  are  not  equipped  with  capital  to  stock  the  farm  as  they 
should  that  farming  is  more  unsatisfactory.  So  I  believe  that  on  the 
whole,  stock  share  renters  are  younger  men  than  cash  renters  and 
I  think  not  more  capable. 

Q.  I  was  wondering  how  to  encourage  live  stock  share  renting 
under  present  marketing  conditions. 

A.  I  think  that  the  argument  could  be  made  at  other  times  far 
better  than  right  now.  I  believe  we  can  make  this  statement,  that 
taking  an  average  of  10  years  instead  of  an  average  of  the  last  2 
years,  that  live  stock  farming  in  the  corn  belt  is  more  profitable 
than  so-called  crop  farming,  therefore  through  a  series  of  years  the 
man  on  the  stock  farm  will  likely  be  paid  for  going  into  that  kind  of 
farming. 

I  think  of  the  stock  share  lease  in  another  way.  The  landlord 
retains  part  of  the  supervision  of  the  farm.  He  is  therefore  more 
interested  in  the  farm.  Because  he  owns  a  half  interest  in  the  live 
stock  he  is  more  likely  to  provide  funds  for  making  adequate  im¬ 
provements  to  take  care  of  that  live  stock.  Inasmuch  as  he  retains 
part  of  the  supervision  of  the  farm  he  feels  that  he  is  running  a  very 
small  risk  in  taking  a  renter’s  note  for  the  renter’s  share  of  the  live 
stock.  In  this  way  ample  credit  is  furnished  the  renter  to  adequately 
equip  and  operate  a  farm  from  the  start.  We  can  go  from  that  point 
to  the  application  of  the  principle  to  the  ownership  of  land.  I  have 
asked  scores  of  farm  owners  if  they  would  be  willing  to  sell  their 


23 


farm  to  an  honest,  industrious,  capable,  young  man  who  did  not  have 
a  dollar  to  pay  on  the  farm  if  that  renter  would  permit  them  to  retain 
the  supervision  of  the  farm  during  the  early  years,  say  the  first  5  or 
10  years  of  the  ownership  of  that  farm.  I  have  the  first  man  to  tell 
me  that  he  did  not  think  he  would  be  safe  in  selling  his  farm  on  that 
basis.  My  point  in  this  connection  is  this, — that  with  the  growth  of 
our  farmers’  organizations  where  a  County  Agent  has  more  super¬ 
vision  than  was  given  to  one  person  before,  that  there  is  a  better 
opportunity  for  supervising  these  farms,  establishing  the  most  profit¬ 
able  type  of  farming  for  that  particular  county  and  inaugurating  a 
credit  system  which  will  more  fully  meet  these  changed  economic 
conditions  than  our  present  credit  facilities  are  able  to  do ;  that  if  we 
increase  the  supervision,  we  largely  decrease  the  risk.  That  is  why 
these  land  credit  systems  on  the  continent  worked  out  so  well.  That 
is  why  Dr.  Hibbard’s  suggestion  this  morning  regarding  the  amount 
of  credit  that  is  obtained  in  the  local  community  works  out  so  well. 
Those  who  loan  the  money  have  a  large  share  in  determining  how 
that  money  shall  be  used. 

I  have  a  few  figures  here  whiqh  were  prepared  in  1917  for  a 
committee  of  which  Dr.  Hibbard  was  the  chairman.  There  is  a  part 
of  this  report  that  I  think  might  prove  interesting  to  you.  “Land 
is  more  fully  utilized  on  owner-operator  farms  than  it  is  on  rented 
farms.  Owners  have  nearly  one-third  more  working  capital  per  acre, 
such  as  live  stock,  machinery,  etc.  The  market  price  of  rented  land 
is  only  a  few  dollars  less  than  owner  operated  land,  yet  the  crop  yields 
are  nearly  10  per  cent  lower.  This  is  partly  accounted  for  in  that 
owners  get  between  15  per  cent  to  20  per  cent  of  their  total  receipts 
from  the  sale  of  crops,  while  tenants  get  from  30  per  cent  to  40  per 
cent  of  their  total  receipts  from  the  sale  of  crops.  Tenants  use  less 
labor  per  acre  and  keep  about  four-fifths  as  much  live  stock  as  the 
man  who  tills  his  own  soil  and  returns  most  of  the  fertility  in  the 
form  of  manure.”  Those  statements  come  from  the  results  of  a  study 
of  more  than  2,000  farms  located  in  different  parts  of  Iowa. 

It  is  unreasonable  to  expect  farm  tenants  to  make  and  save  more 
money  than  renters  have  done  during  the  past  generation,  yet  owner¬ 
ship  is  slipping  away  from  them  because  we  are  not  adjusted  to 
changed  economic  conditions.  Farm  ownership  in  Iowa  is  not  a  mat¬ 
ter  of  financial  independence.  It  is  a  question  of  becoming  an  owner 
at  the  time  a  man  is  capable  of  managing  a  farm  of  his  own.  If 
tenants  were  given  the  opportunity  to  buy  a  farm  when  they  are 
capable  of  ownership,  farm  tenancy  would  be  reduced  one-third 
of  its  present  amount. 

Farm  tenancy  has  its  place  in  agriculture,  is  one  of  the  neces¬ 
sary  rounds.  But  farm  tenancy  should  be  controlled  so  the  period 
of  tenancy  will  not  be  so  long  that  ownership  will  be  lost  sight  of 
and  tenancy  will  become  a  permanent  institution  instead  of  a  means 
toward  ownership.  A  generation  ago  the  farm  hand  left  school  at 
17  years  of  age  and  without  inheritance  became  a  renter  at  20  years 
of  age.  Now  a  farm  hand  leaves  school  at  18  years  of  age  and  with¬ 
out  inheritance  becomes  a  renter  at  28  years  of  age.  From  2  to  5 
years  of  farm  tenancy  should  enable  men  who  have  been  farmers 


24 


to  successfully  manage  a  farm  of  their  own.  There  are  two  princi¬ 
pal  reasons  for  postponing  the  age  of  ownership.  One  is,  a  small 
farm  does  not  pay,  and  another  is,  the  inflated  speculative  price  of  land 
which  requires  more  savings  to  buy  a  farm. 

May  I  say  a  word  in  regard  to  studies  that  we  made  in  1913, 
1915  and  every  year  since  that  date?  Under  normal  conditions  be¬ 
fore  the  war  when  land  was  advancing  rapidly  in  price,  that  is  in 
the  year  1913,  the  cash  renter’s  rate  was  2.3  per  cent  on  the  invest¬ 
ment  when  the  mortgage  rate  of  interest  was  per  cent.  A  year 
later  on  323  cash  rented  farms  the  per  cent  had  fallen  to  2.16  per  cent. 
That  is,  before  the  war,  landlords  on  the  cash  rental  basis  were  getting 
less  than  half  the  mortgage  rate  of  interest.  The  point  was  brought 
out  this  morning  that  men  owned  land  for  two  principal  reasons : 
One  is  the  annual  return  from  the  farm ;  the  other  is  the  advance 
in  the  price  of  land.  These  men  were  anticipating  the  advance  in  price 
of  land  during  these  years  and  they  had  capitalized  that  anticipated  rise. 
That  very  fact  made  it  difficult  for  renters  to  go  in  debt  at  mort¬ 
gage  rates  of  interest  to  buy  the  land  and  was  responsible  in  part  for 
the  postponing  of  the  time  when  these  men  would  become  owners 
of  farms.  You  increase  the  number  of  years  required  to  make  the 
first  payment  on  a  farm  and  you  increase  the  amount  of  tenancy,  so 
there  is  a  direct  relation  between  the  increase  of  tenancy  and  the 
postponing  of  the  age  of  ownership.  I  think  we  face  a  novel  situa¬ 
tion  at  this  time.  Renters  on  the  cash  basis  have  made  big  money 
during  the  past  5  years.  Landlords  who  have  received  a  crop  rent 
have  made  big  money  during  the  war  period.  The  last  2  years  have 
materially  reduced  the  returns  in  both  cases.  During  this  period  there 
has  been  a  rapid  increase  in  the  price  of  land.  What  is  likely  to  hap¬ 
pen  in  the  immediate  future?  Nobody  knows.  It  is  probable,  how¬ 
ever,  that  land  will  not  advance  in  price  as  it  has  done  during  the 
past  2  decades.  Landlords  are  going  to  look  more  and  more  to  the 
rent  as  the  entire  pay  they  get  for  owning  land  with  a  probability  of 
some  decline  in  the  price  level.  Renters  will  find  it  increasingly 
difficult  to  pay  their  rent.  About  the  only  remedy  that  I  see  that 
will  help  the  situation  immediately  is  to  increase  the  efficiency  in 
farming.  Make  this  labor  go  just  a  little  farther  than  it  has  gone 
before.  We  can  do  this  by  determining  the  most  profitable  type  of 
farming  for  the  different  parts  of  this  State.  I  think  your  agricul¬ 
tural  college  is  able  to  give  some  excellent  help  in  that  respect. 

Q.  Would  you  make  any  comparisons  as  to  the  relation  of  the 
price  of  farm  products  and  the  increase  of  land  during  the  period 
of  1910-1914  and  from  1914  on?  What,  in  your  opinion,  is  the  chance 
of  a  young  man  buying  a  farm  compared  to,  say  1900? 

A.  A  comparison  of  the  increase  in  the  price  of  land  now  and 
of  farm  products  with  a  pre-war  average  from  1910-1914  shows  that 
in  Iowa  there  was  a  little  larger  increase  in  the  price  of  land  than 
there  was  in  the  price  of  farm  products.  I  think  the  fact  that  land 
had  never  gone  down  in  price  largely  controlled  buyers  in  thinking 
that  land  could  not  be  bought  cheaper  and  men  were  anxious  to  buy 
before  the  price  went  higher;  that  the  high  price  of  hogs  and  corn 


following  the  signing  of  the  armistice  when  farmers  had  thought 
that  prices  would  immediately  drop,  was  another  feature  that  was 
important.  When  hogs  were  selling  from  20  cents  to  25  cents  farmers 
had  an  idea  that  land  could  be  capitalized  with  hogs  selling  at  least 
12  cents  and  corn  at  a  dollar.  Many  made  the  remark  that  corn  would 
never  be  sold  at  a  dollar  again,  that  hogs  would  never  go  below 
10  cents  again.  Many  were  carried  off  their  feet  with  news¬ 
paper  propaganda.  The  causes  that  I  do  think  were  largely 
responsible  were  the  psychology  of  land  values,  the  high  prices  at 
which  corn  and  hogs  were  selling,  and  the  farmers  were  surprised 
that  prices  were  high.  They  thought  they  would  immediately  fall 
after  the  signing  of  the  armistice.  We  were  surprised  to  note  that 
speculation  in  Iowa  almost  closed  over  night  with  the  falling  of  the 
price  of  hogs.  There  was  considerable  less  activity  in  exchange 
of  farms.  The  surprising  feature  of  the  recent  so-called  land  boom 
was  the  immediate,  effect  it  had  on  farm  ownership.  Data  showed 
that  there  were  more  farmers  who  bought  land  to  operate  the  land 
than  sold  land,  meaning  that  for  the  time  being,  farm  ownership 
had  increased.  We  must  bear  this  in  mind,  however,  that  most  of 
this  land  was  sold,  possession  being  given  the  following  March  first, 
that  heavy  payments  were  to  begin  later.  Whether  those  men  will 
he  able  to  pay  out  on  those  farms  and  retain  that  ownership  is  another 
question. 

I  would  like  to  say  a  word  about  tenant  right.  Eight  years 
ago  I  began  a  study  of  farm  tenancy  in  Iowa  with  the  thought  that 
tenants  were  playing  havoc  with  the  farming  interests  of  that  State. 
I  was  surprised  to  learn  that  tenant  conditions  were  far  more  satis¬ 
factory  than  I  had  anticipated ;  that  one  of  the  needs  at  that  time  was 
to  protect  the  honest  landlord  and  the  honest  tenant  from  the  dis¬ 
honest  tenants  and  landlords ;  that  there  was  considerable  drainage 
taking  place  in  the  State;  that  renters  were  very  anxious  to  get  the 
farm  tiled  to  increase  the  yields ;  that  landlords  had  no  difficulty  in  get¬ 
ting  the  tile  hauled  and  the  ditches  filled  in  free  if  the  landlord  would 
furnish  the  tile  to  put  them  in ;  that  these  renters  had  no  protection 
against  the  landlord  raising  the  rent  to  cover  the  value  of  the  im¬ 
provement  which  the  renter’s  labor  represented.  Instead  of  that’ 
renter  remaining  on  the  farm  to  get  the  value  of  his  labor  in  in¬ 
creased  yields,  the  rent  would  be  boosted  up,  the  renter  disgusted 
would  leave  the  farm  with  the  idea  that  he  try  to  exploit  every  farm 
that  he  could  to  get  even  with  what  he  had  lost.  Landlords  who  had 
spent  money  to  equip  a  farm  with  good  buildings,  had  spent  a  life¬ 
time  in  building  up  the  farm  and  had  retired  when  they  had  gotten 
the  land  in  good  shape,  had  tenants  come  onto  their  farms  and  ex¬ 
tract  every  cent  they  could  from  the  land  and  the  landlords  had  no 
recourse.  We  found  that  a  compensation  law  which  would  bind  the 
outgoing  tenant  to  the  extent  that  the  incoming  tenant  is  benefited 
would  protect  all  parties  concerned,  including  the  land ;  that  it  would 
encourage  improvements  not  only  on  the  part  of  the  landlord  but 
also  the  renter,  if  they  had  an  assurance  that  the  improvements  they 
made  would  be  taken  care  of  and  each  would  be  compensated  for  the 
improvement  that  he  made;  that  it  is  just  as  important  to  protect  the 


26 


landlord  as  it  is  to  protect  the  renter ;  that  there  should  be  an  indem¬ 
nity  clause ;  that  a  landlord  who  rents  his  farm,  say  a  $40,000  farm, 
should  have  some  assurance  that  he  will  get  back  the  principal  with 
interest.  A  banker  would  not  think  of  making  a  loan  without  good 
security.  On  the  other  hand,  a  landlord  is  justified  in  expecting  some 
security  for  the  use  of  his  capital. 

Q.  Did  they  ever  get  any  legislation  in  Iowa  along  those  sug¬ 
gested  lines? 

A.  They  are  ready  for  some  legislation  there  now.  That  is, 
public  opinion  is  rapidly  developing  toward  some  tenancy  legislation. 
I  have  received  letters  for  many  years  from  interested  tenants,  land¬ 
lords  and  bankers,  suggesting  legislation  much  as  I  have  outlined  it, 
but  nothing  has  been  done  so  far. 

Q.  Is  there  any  state  in  the  United  States  that  has  any  legislation 
along  this  line  of  compensating  the  tenant  for  improvements? 

A.  I  think  no  state  has  passed  such  legislation.  It  is  interest¬ 
ing  to  note  in  passing  that  this  compensation  law,  this  tenant  right 
law  in  England,  had  its  suggestion  from  the  working  out  of  the  prin¬ 
ciple  in  actual  practice  before  the  legislation  came.  That  is,  that  they 
found  typical  cases  where  the  compensation  law  was  really  in  effect 
before  the  legislation  was  passed;  that  while  the  suggestion!  was 
mentioned  as  early  as  1850,  that  the  law  was  not  passed  until  1875. 
It  was  not  until  1883  and  then  as  amended  in  1900  that  they  perfected 
a  law  that  is  very  satisfactory. 

Q.  Is  this  compensation  law  a  matter  for  Federal  legislation 
rather  than  State  legislation? 

A.  It  is  I  believe,  entirely  within  the  province  of  State  legis¬ 
lation.  I  believe  that  a  compensation  law  in  Illinois  would  make 
renting  land  more  desirable  to  renters.  I  believe  it  would  make 
the  ownership  of  land  more  desirable  for  owners.  I  believe  the  assur¬ 
ance  on  the  part  of  either  landlord  or  renter  that  he  would  get  com¬ 
pensation  for  improvements  made  would  have  this  effect,  that  a  farm 
would  be  worth  more  to  the  renter  and  would  be  worth  more  to  the 
land  owner. 

Q.  You  heard  what  Dr.  Hibbard  said  in  regard  to  progressive 
taxation.  Have  you  any  ideas  along  that  line  ? 

A.  That  is  as  good  a  method  as  I  know  to  check  speculation.  I 
feel  that  we  have  a  much  more  difficult  problem  in  our  country  than 
the  old  countries  had.  We  are  still  a  new  country,  where  land  is  to 
be  had  farther  north  and  farther  west.  There  are  more  opportuni¬ 
ties  here  for  investment.  Our  farming  is  not  stabilized  as  it  is  in 
the  older  countries.  We  can  expect  exchanges  of  farms.  We  can 
expect  some  land  speculation  and  for  that  reason  the  problem  is 
harder  to  solve  than  in  the  older  countries  where  farms  rarely  ex¬ 
change  hands. 

Q.  A  suggestion  one  young  farmer  made  at  one  of  our  meet¬ 
ings  was  that  there  be  a  transfer  tax  on  land ;  for  instance,  if  a  man 
bought  a  farm  and  sold  it  within  a  month  to  discourage  the  rapid 
transfer  of  land  for  speculative  purposes. 

A.  I  think  there  is  some  economic  merit  in  that  suggestion.  I 
don’t  know  that  that  is  being  tried  out  anywhere. 


27 


Q.  I  don’t  know  of  its  being  tried  out  anywhere  but  there  is 
no  objection  to  trying  it.  A  transfer  tax  might  be  tried  in  a  very 
mild  form.  A  man  buying  land  for  any  legitimate  reason,  intending 
to  keep  it  at  least  one  year,  raise  one  crop,  need  not  be  taxed.  If  he 
doesn’t  intend  to  keep  it  one  year  there  might  be  a  transfer  tax 
placed  on  land  resold  within  a  year  and  none  after  that,  which  would 
be  a  very  mild  sort  of  a  law  and  at  the  same  time  have  a  little  effect 
in  discouraging  speculation. 

A.  I  have  had  many  farms  called  to  my  attention  where  they 
have  changed  hands  as  many  times  as  5  during  one  year.  One  farm 
that  the  same  man  stayed  on  sold  the  first  time  at  $65  and  the  fifth 
time  it  sold  for  $135.  The  contract  was  not  interfered  with  at  all. 
The  man  went  right  on  renting  but  the  farm  exchanged  hands  5 
times. 

Q.  Cases  of  that  kind  are  very  common  during  a  land  boom. 
I  rather  think  that  a  transfer  tax  operated  on  quick  transfers  would 
discourage  quite  materially  the  kind  of  a  land  boom  we  had  a  year 
ago. 

A.  I  think  it  would.  We  found  in  our  studies  in  Iowa  that 
the  newspapers  heralded  these  big  advances  in  the  price  of  certain 
farms  and  advertised  these  farms  that  were  sold  more  than  twice 
but  something  like  68  per  cent  of  the  farms  which  were  sold  ex¬ 
changed  hands  but  once  in  Iowa  last  year. 

Q.  Do  you  know  of  any  state  that  has  laws  regulating  real 
estate  agencies,  the  amount  of  commission  they  can  charge,  or  any 
other  similar  legislation? 

A.  California  regulates  real  estate  agencies  and  Oklahoma  has 
provided  for  a  graduated  tax  on  land  holdings  in  excess  of  640  acres, 
and  also  upon  the  income,  rents  and  profits  of  lands  held  by  lease 
in  excess  of  640  acres. 

In  time  we  are  going  to  regard  these  farms  as  homes,  not  places 
to  make  enough  so  farmers  can  retire,  but  places  to  live  after  the 
farm  is  placed  in  a  condition  where  it  will  make  money.  I  found 
this  to  be  true  in  our  studies,  that  most  men  just  get  a  farm  in 
good  shape  to  make  money  when  they  retire,  leave  it,  and  go  to 
town.  It  has  been  the  one  desire  of  their  lives  to  get  that  farm  look¬ 
ing  well,  good  buildings,  land  in  good  shape  and  well  stocked,  and 
once  they  get  it  there  they  are  ready  to  retire.  They  haven’t  en¬ 
joyed  life  very  much  as  they  went  along  and  they  think  they  want 
to  leave  the  farm. 

I  like  to  put  that  proposition  up  to  the  landlord  and  the  renter 
in  the  same  way.  When  we  began  our  studies  in  1912  we  collected 
data  on  rented  farms  in  every  part  of  the  State  of  Iowa.  Renters 
and  landlords  would  often  ask  me  this  question,  “You  say  you  are 
here  to  benefit  both  of  us?  You  can’t  do  that.  You  can’t  help  both 
of  us.  There  is  only  one  that  can  be  helped.”  My  reply  was,  “I 
think  I  can  help  both  of  you.  Your  interests  are  mutual.  Perhaps 
you  are  following  a  penny  policy  instead  of  a  dollar  policy”.  I  re¬ 
member  one  particular  case  where  a  landlord  was  very  systematic.  He 
believed  in  making  a  contract  that  looked  consistent.  He  had  a  good 


stock  share  renter  on  his  farm.  The  landlord  returned  half  of  all 
that  was  produced,  half  of  all  the  eggs  produced  and  half  of  all 
chickens  sold.  The  renter,  on  the  other  hand,  had  been  told  by  his 
wife  -that  she  had  been  taking  care  of  the  poultry  and  inasmuch  as 
she  was  doing  all  the  work  she  ought  to  get  all  the  returns  from 
poultry.  The  landlord  insisted  on  getting  half  of  all  eggs  produced. 
The  renter  moved  away.  They  were  working  on  a  penny  policy. 
Here  were  the  conditions.  It  happened  to  be  very  good  land,  a  large 
farm,  and  an  excellent  opportunity  to  make  money.  A  large  share 
of  the  land  was  in  pasture  which  required  very  little  labor  on  the 
part  of  the  renter,  which  you  might  say  he  was  getting  almost  free. 
That  added  advantage  meant  dollars  to  him  where  the  half  of  the 
eggs  meant  cents  to  the  landlord.  It  is  getting  at  some  of  those 
big  things  in  a  lease  that  is  important. 

Q.  Do  you  think  there  is  anything  in  the  way  of  lease  pro¬ 
visions  that  could  be  the  subject  of  legislation,  aside  from  compen¬ 
sation  ? 

A.  I  would  treat  it  as  a  matter  of  education. 

Q.  It  would  be  pretty  hard  to  handle  in  a  legislative  way? 

A.  I  think  it  would.  I  do  believe  that  education  is  very  im¬ 
portant  but  I  don’t  see  how  legislation  would  help  it. 

If  it  were  possible  the  notice  given  renters,  should  be  extended. 
I  believe  in  justice  to  the  renter  that  6  months’  notice  should  be  given 
in  case  he  is  to  move. 


UNIVERSITY  OF  ILLINOIS-URBANA 


3  0112  042421914 


